On November 15, the UK Financial Conduct Authority (FCA) updated its webpage (webpage) in connection with position limits for commodity derivative contracts.Under the revised Markets in Financial Instruments Directive (MiFID II), limits are required to be established on the size of a net position a person can hold (at all times) in commodity derivatives traded on EU/EEA trading venues and economically equivalent over-the-counter contracts. The webpage lists the commodity derivative contracts that the FCA has currently identified as trading on a UK trading venue, which, beginning January 3, 2018, will have a bespoke position limit set against them. The list will be subject to changes and updates from time to time, and firms are encouraged to check it regularly.The FCA has also updated the position limits for Dated Brent, which it initially published on October 26, to reflect the aggregation of this contract with the daily Dated Brent contract (which has the same underlying), the … [Read more...] about FCA Publishes Further Set of Position Limits for Commodity Derivative Contracts
Financial Institutions & Banking
On November 15, the Enforcement Division of the Securities and Exchange Commission issued a report highlighting its 2018 enforcement priorities and its enforcement results for 2017. In the report, the Enforcement Division stated the five core principles that will guide enforcement in 2018: 1) focus on the Main Street investor; 2) focus on individual accountability; 3) keep pace with technological changes; 4) impose sanctions that most effectively further enforcement goals; and 5) constantly assess the allocation of resources.In 2017, the Enforcement Division brought 754 enforcement actions, including 446 stand-alone actions, which returned a record $1.07 billion to harmed investors. In total, the SEC obtained judgements and orders totaling more than $3.789 billion in disgorgement and penalties.More information is available here and the report itself is available here. This post was written by Timothy D. Nolan. … [Read more...] about SEC Enforcement Division Issues Report on Priorities and Fiscal Year 2017 Results
This is what we see at the present time: Congressional ActionOn the congressional front, we have not been optimistic about the general prospects for changes to the Dodd-Frank Act or other financial reform legislation. But Senate Banking Committee Chair Mike Crapo and several Banking Committee Democrats on November 13 announced a bipartisan agreement in principle on the outlines of targeted “economic growth” legislation. The new proposal would, among other things, raise the current Dodd-Frank Act $50 billion asset threshold for a bank to be treated as “systemically important”—and therefore subject to more stringent Dodd-Frank systemic regulation—to $250 billion. The proposal also contains other “community bank relief” measures, including an exemption from the Volcker Rule for banking organizations with less than $10 billion in assets and limited trading assets. As is generally the case these days, prospects for further action on this … [Read more...] about A Brief Look at the Current Prospects for Financial Reform
The vacancy presents the president with an opportunity to appoint a director who shares the administration’s views on financial regulation and can put the agency on a different regulatory path. In due course, the president will nominate someone to fill the post permanently, and that person will be subject to Senate confirmation. The CFPB, however, enjoys strong support not only from Senate Democrats, but also in major sectors of the financial consumer community, having, among other things, collected over $12 billion in consumer restitution. In turn, the nomination and confirmation process for the new director may be difficult, depending in large part on who is nominated for the vacancy.However, given the CFPB’s vast enforcement and rule-making authority, the issues of concern for the financial services industry raised by Mr. Cordray’s departure remain real and immediate. There are civil investigative demands (CIDs) being issued every day, investigational hearings … [Read more...] about CFPB – What’s Next?
On November 15, the Financial Industry Regulatory Authority released an update on actions it has thus far taken under the “FINRA360” initiative, which is an ongoing comprehensive review of FINRA’s operations. As of November 13, these actions include: 1) replacing the Technology Advisory Committee with an annual “CIO Summit”; 2) broadening the authority of the Operations Advisory Committee; 3) updating the public descriptions of certain advisory committees on FINRA’s website to clarify which committees are available as forums for discussion of specific issues; 4) issuing annual notices about committees and the application process to be considered for a vacant position; and 5) emailing election notices to a broader distribution group, including each member firm’s CEO, CCO and COO.More information is available here. This post featured contributions from Timothy D. Nolan. … [Read more...] about FINRA Releases Summary of Phase 1 Changes to FINRA Advisory Committees Under FINRA360
On November 15, the Financial Industry Regulatory Authority issued a Regulatory Notice concerning the Securities and Exchange Commission’s approval of SEC Rule 6898 (Consolidated Audit Trail (CAT) Fee Dispute Resolution). The new rule establishes a procedure under which an industry member that disputes a CAT fee must file a written application with the CAT NMS, LLC within 15 days after being notified of the disputed charge. The application must: 1) identify the disputed CAT fees; 2) state the specific reason why the applicant disputes such CAT fees; and 3) identify the relief sought. The Fee Review Subcommittee will then decide whether to review, and if so, what, if any, relief will be granted. This rule will be implemented on December 1 (but will not be in effect until CAT fees are operative).More information is available here. This post was also written by Timothy D. Nolan. … [Read more...] about FINRA Releases a Regulatory Notice That the SEC Approved the CAT Fee Dispute Resolution Process
On November 10, the Financial Industry Regulatory Authority released the contents of a new Order Routing Conflicts targeted exam letter that certain member firms may receive. FINRA uses targeted exams (e.g., sweeps) to gather information on emerging issues and uses such information to pinpoint regulatory response to such issues. FINRA chooses the identity of member firms that will participate in a sweep based upon a number of factors.The new Order Routing Conflicts letter requests information relating to receipt of order routing inducements and how they affect a firm’s order routing practices and decisions. Information requested includes: 1) how the firm quantifies benefits to its customers from the firm’s receipt order routing inducements; 2) how the firm fulfills its duty of best execution when routing orders to market centers with materially higher transaction costs than other market centers; and 3) how the firm handles conflicts between the firm’s best execution … [Read more...] about FINRA Releases New Targeted Exam Letter Regarding Order Routing Conflicts
Credit card-issuers have every reason to pull consumers in their direction to increase card use and, ultimately, their bottom line. But, do they have the right to stop merchants from steering you too?That is the question SCOTUS will soon be taking up in a long-standing battle between the U.S. government and American Express over Amex’s “anti-steering” policies. The primary question it seems, is not the reasonableness of Amex’s anti-steering provisions but, rather, what effect they have on consumers, if any. As the consumer, you get to weigh in. Do you think Amex’s anti-steering affects you?In Ohio v. American Express, the U.S. government and several states banded together to challenge Amex’s rules that prevent merchants from steering consumers away from buying with an Amex card by offering incentives or posting signs showing they favor other cards, such as Visa or Mastercard. Amex, known for its higher credit card transaction fee (typically 3% of … [Read more...] about SCOTUS to Soon Discover: What’s in Your Wallet and Why?
In the wake of the Chinese Communist Party’s 19th Party Congress, and US President Donald Trump’s visit to China, the Ministry of Finance has announced a high-level roadmap for broadening market access for foreign investors in the financial services industry. This policy development, long under discussion, is part of an effort by the Chinese leadership to bolster deteriorating foreign investor sentiment in the country. Some observers have suggested that the timing of the announcement—immediately after Mr. Trump’s visit—suggests that it is meant to be a kind of gift from Chinese President Xi Jinping to Mr. Trump. Others have remarked that at least some in the Trump administration were not expecting this announcement, and that its timing may have been chosen to emphasize that China is committed to opening its markets, but on its own timeline.Announced on November 10 by Vice Minister of Finance Zhu Guangyao, the roadmap (which was conveyed in oral form, not … [Read more...] about China to Broaden Market Access for Foreign Investors in Financial Services
On November 3, 2017, the Office of the Inspector General (“OIG”) of the Federal Deposit Insurance Corporation released its report (“OIG review”) in respect of the failure of First NBC Bank, New Orleans, Louisiana (“First NBC”). The objectives of the OIG review were (1) to determine the causes of the First NBC’s failure and resulting loss to the Deposit Insurance Fund and, (2) evaluate the FDIC’s supervision of First NBC over the course of First NBC’s problems. The causes of the failure of First NBC contained many of the characteristics of bank failures identified in prior material loss reviews: (1) a dominant executive with broad lending authority and limited board of directors’ oversight, (2) rapid growth funded by high-cost deposits, and (3) large lending relationships in concentrations without adequate risk management controls. In addition, First NBC developed concentrations in trade receivables and complex … [Read more...] about First NBC Bank: Implications of Material Loss Review